This Week in Africa Finance
Plus: Indorama secures $1.25 billion investment, Uganda's gold exports grows 10-fold, Actis acquires Swiftnet.
Happy Monday! Hope you had a good weekend , We have more dealmaking activities , developments and trends from last week that have shaped Africa's financial landscape . Don't forget to share this newsletter with friends and colleagues and If you're joining our community for the first time, why not subscribe here
Let's dive in into today’s email:
- Industrials : Indorama secures $1.25 billion investment
- Sovereign Wealth Fund: Mozambique's new Sovereign Wealth Fund is a big deal
- Natural Resources: Uganda's gold exports will grow 10-fold to $2.3 billion in 2023
- Green Finance: Rwanda joins other African countries to issue first Green Bond
- Market Snippets: Morocco secures $108 million for infrastructure projects.
- Marco Matters: Democratic Republic of the Congo became the world's second largest copper producer
- Deals Roundup: Notable deals of the week
Industrials
IFC and Partner Investors Provide $1.25 Billion Investment In Nigeria's Indorama Eleme Fertilizer and Chemicals
The International Finance Corporation( IFC) an arm of the World Bank, has led a group of investors in providing a $1.25 billion financing package to Indorama Eleme Fertilizer and Chemicals Limited in Nigeria.
Why is this Important: The Port-Harcout based Indorama Eleme Fertilizer and Chemicals is Sub-Saharan Africa's largest producer of granular urea, a key input for agricultural fertiliser production, with a big market in Nigeria with a current production capacity of only eight million metric tonnes. The $1.25 billion financing will provide the required investment for Indorama to build a third nitrogenous urea fertiliser plant with expected annual capacity of 1.4 million metric tons of urea and a new shipping terminal at its Port Harcourt base.
Singapore based Sumitomo Mitsui Banking Corporation (SMBC), joined IFC as joint mandated lead arranger and lender. Other financing partners include African Development Bank, Bangkok Bank, British International Investment, Citibank, Deutsche Investitions- und Entwicklungsgesellschaft (DEG), DZ Bank, Emerging Africa Infrastructure Fund (EAIF), Rand Merchant Bank, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), Export-Import Bank of India (India Exim Bank), Export-Import Bank of Korea (KEXIM), the Standard Bank Group, Standard Chartered Bank, and the United States International Development Finance Corporation (DFC).
The bottom line: Nigeria agriculture sector contributed 23.69 per cent to its GDP. The demand for key production inputs like fertiliser continues to grow as the country's tries to diversify from its dependency on oil. The critical nature of this sector has led other leading conglomerates like Dangote Group, BUA and other firms to invest in various sub-sectors of the agriculture value chain. The new funding provides Indorama with the opportunity to play an active role in meeting the growing demand but also in an energy efficient way.
Sovereign Wealth Fund
Why Mozambique's new Sovereign Wealth Fund is a big deal.
Mozambique's council of ministers recently approved creating the country's new sovereign wealth fund legislation.
Why is this important: Most African countries are creating sovereign wealth funds to manage the monetisation of their natural resources. In Mozambique's case, its gas-rich discoveries of up to 150tr cubic feet (tcf) makes the nation one of Africa's largest suppliers of LNG. The size of the findings could lead to export receipts of more than $6 billion a year.
In the Numbers: Mozambique's debt-to-GDP ratio is approximately 92 per cent, with an inflation rate averaging 6.5 per cent. In 2022, the country signed a three-year agreement for a $456 million Extended Credit Facility (ECF) with the IMF. It has benefitted from concessional public external debt, which has reduced its cost of servicing its debt.
The bottom line: The prospect of Mozambique's sovereign wealth fund presents the nation with a unique position to deliver economic value to its citizens. This can be achieved if the correct governance and investing structure is in place. This ensures transparency that can increase co-investing opportunities and create a funding transformation to decrease the nation's debt burden.
Natural Resources
Uganda's gold exports will grow 10-fold to $2.3 billion in 2023.
Uganda's gold export has grown 10-fold over the last twelve months.
Why is this important: According to data from the Central Bank of Uganda and reported by Reuters, the country's gold export rose to $2.3 billion in 2023 compared to $201 million in 2022, driven by outputs from new mining assets across the country, including Wagagai Mining Ltd, a Chinese-owned plant.
Uganda is one of the promising economies though its GDP fell to 4.6 per cent in 2023. It's economy is forecasted to grow to 5.8 per cent in 2024 as the country continues its economic reforms.
The bottom line: Uganda was a preferred destination for gold during the pandemic as investors explored other asset classes. An increase in gold exports presents an opportunity for the country to fund infrastructure projects to grow the economy.
Green Finance
Rwanda joins other African countries to issue first Green Bond.
Prime Energy, the Kigali-based hydropower company, has issued Rwanda's first Green Bond, valued at $7.3 million.
Why is this important: Rwanda will join other African countries taking proactive steps to invest in the needed energy infrastructure and increasing grid connectivity to rural areas while they build their sustainability credentials.
The bottom line: Most African countries like Rwanda see the vast potential of solar energy solutions leveraging the abundant temperature to add to the existing energy generation, transmission and distribution ecosystem to drive economic growth.
Markets Snippets
- Abia State has received $125 million from the Islamic Development Bank.
- Morocco has secured a $ 108 million loan from the African Development Bank to fund new local-level sustainable infrastructure projects.
- Nigeria's Imo State is discussing with Afreximbank to raise $1.5 billion in investment to fund key state-level projects.
- South Africa's hedge funds received a net flow of $332 million in 2023, with assets under management (AUM) excluding funds of funds growing to $7.3 million, according to data from the Association for Savings and Investment South Africa.
- Malawi’s inflation rate for February 2024 fell by 1.5 percentage points to 33.5 per cent
Marco Matters
- The Democratic Republic of the Congo became the world's second largest copper producer in 2023 with its production capacity reaching 2.84 million and Peru's production output stalling to 2.76 million tons.
- International Monetary Fund (IMF)'s Executive Board has approved the release of $1.3 billion to Ivory Coast to support the country's climate change effect reforms.
Deal Flow
M & A
- Gaia Fund Managers has acquired a majority stake in Oasis Water’ with a national presence of more than 80 franchisees, 364 franchise outlets, 250 retail shops, 94 express stores, six depots and 14 factories.
- Pan African Banking group Access Bank has acquired the National Bank of Kenya (NBK) from the KCB Group.
Consumer
- Africa-focused private equity investor Admaius Capital Partners has invested in Parkville, the Egypt-based healthcare and wellness company.
Agriculture
- Injaro Agricultural Capital Holdings Limited (IACHL), the leading impact investors and manager of Injaro Investments, has sold its equity stake in Ghana’s oldest animal feed producer, Agricare, to Flour Mills of Ghana Limited (FMGL).
Fundraising
- Kenya-based NCBA Group has raised a $50 million loan from Proparco the French development finance institution, to scale its lending product to small and medium-sized enterprises (SMEs).
- Ninety One the South Africa asset manager has secured a funding commitment from the International Finance Corporation (IFC) for its Africa Credit Opportunities 3 Fund .
Logistics
- Ghana-based Moove – an e-logistics startup, has secured $100 million in a Series B funding round at a $750 million valuation. Uber led the investment with other investors like Mubadala, AfricInvest, Palm Drive Capital, The Latest Ventures, Triatlum Advisors AG, and Future Africa.
Infrastructure
- Actis the private equity firm is in talks with South Africa’s Telkom SA to acquire its mast and tower business Swiftnet.
Venture Capital
- P1 Ventures the Africa-focused venture capital firm has completed a second close of $35 million for its Fund II, with commitments from International Finance Corporation (IFC) as its first public institutional investor.
Week Ahead
- March 25: Ghana's interest-rate update
- March 26: Nigeria's interest-rate update and Namibia latest economic-growth data
- March 27: South Africa and Mozambique and South Africa's interest rate update
- March 28: Uganda, Zambia and Kenya's latest inflation rate update
- March 29 Botswana's growth update
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